More from Krugman on why Blanche Lincoln and other small state Senators are fighting public option

[flpoljunkie]

June 22, 2009

Competition, redefined

Great catch by Digby, who quotes Sen. Blanche Lincoln about how terrible it would be if a government-run insurance plan undermined free-market competition, then links to this:

The Justice Department considers an industry to be “highly concentrated” if one company has 42 percent of the market. In Arkansas — Senator Lincoln should take note — Blue Cross Blue Shield has 75 percent of the market. If you take government self-insurance plans out of the equation, it’s higher. The state ranks as the ninth most concentrated in the country. Is it any wonder that insurance premiums have risen five times as fast as wages?
The truth is that the notion of beneficial competition in the insurance industry is all wrong in the first place: insurers mainly compete by engaging in “risk selection” — that is, the most successful companies are those that do the best job of denying coverage to those who need it most. But in any case, Arkansas is in effect a one-insurer monopoly state, with no competition at all — unless a public plan is created.

In fact, I may have a new hypothesis about the political economy of the health care fight. One thing that’s obvious, if you look at the balking Democrats I chided in today’s column, is that almost all of them come from states with small population. These are also, by and large, states in which one or at most two private insurers dominate the market.

So here’s a suggestion: while the opponents of a private plan say that they’re trying to defend market competition, what they’re actually doing is defending lucrative local monopolies.

http://krugman.blogs.nytimes.com/2009/06/22/competition-redefined/

[Captain Hilts]

1. That's REALLY interesting. nt

[Supersedeas]

23. as interesting as a monopoly can be -- competition my ass.

[Skinner]

2. Interesting.

Good catch.

[rurallib]

3. Had heard my senator (Tom Harkin) was wavering and considering co-ops.

I think Iowa is even more concentrated than Arkansas or close to it anyway. I could not understand why Harkin would waffle. Now I do. Plus Des Moines is home base for bunches of insurance companies.
We will be having lunch with one of his top assistants tomorrow (something he does every year. we just have time to attend) This is definitely a question that will come up.

[karynnj]

7. It will be interesting to hear what his aide says

I wonder if it might be that the idea of a non-profit coop might sound like a credit union vs a bank. In concept, it might be better than actually written in law. Though, I wonder in a country where the concept of HMOs is not positive, if the coop will get public support. I know they aren't the same, but at least on the surface they sound somewhat alike.

It clearly was offered as a compromise, but I have not heard many Republicans rushing to support it.

[rurallib]

11. Co-ops = HMOs. How did that work out?

One of 400 offered by repugs and DLC to protect the insurance companies.

[karynnj]

17. I was not saying they are the same thing

What I was saying was that to me - they seemed when you don't really look closely at either, to have similarities. (I actually liked my HMO back in the 1980s, when I paid less than $100 total when I had my first child - even though I had an unscheduled cesarean and she spent a few days in the special care nursery (though fortunately she was found to be perfectly healthy). This was with the practice I wanted and had gone to before there were HMOs and at the very well regarded hospital that would have been my choice anyway. that and virtually no paperwork! I also know the horror stories of others elsewhere.)

[rurallib]

20. The concept of HMO was actually a sound concept - but....

it sure got bastardized by the greedy folks fast

[drm604]

4. K&R

VERY interesting. They need to be publicly called out on this. That last sentence is key:

"while the opponents of a private plan say that they’re trying to defend market competition, what they’re actually doing is defending lucrative local monopolies."

A public plan will introduce real competition into the equation. Yet the people who claim to support the marketplace are trying to prevent that competition.

Meanwhile the vast majority of the public supports a public option. 83% according to this article: http://www.ourfuture.org/blog-entry/2009062515/new-poll-shows-tremendous-support-public-health-care-option

Eighty-three percent of Americans favor and only 14 percent oppose “creating a new public health insurance plan that anyone can purchase” according to EBRI, a conservative business research organization. This flatly contradicts conservatives’ loudest attack against President Obama’s plan to provide quality, affordable health care for all.
...
Here’s who paid for the poll, as stated by EBRI:

This survey was made possible with support from AARP, American Express, Blue Cross Blue Shield Association, Buck Consultants, Chevron, Deere & Company, IBM, Mercer, National Rural Electric Cooperative Association, Principal Financial Group, Schering-Plough Corp., Shell Oil Company, The Commonwealth Fund, and Towers Perrin.

So clearly, no one can accuse this organization of being “liberal” on health care issues.

[HughMoran]

5. Oh, and let's not forget "lucrative local monopolies" = major campaign contributions

...in case that wasn't clear. :)

[pleah]

6. K&R

[Stand and Fight]

8. Somehow I am not surprised...

It's not just health care reform that should be on the top of the progressive agenda for 2009. It is absolutely vital that we also pass campaign finance reform. That's the bull in the china shop that's wrecking everything. These crooks go too far. Too far.

[Stand and Fight]

9. Recommended! n/t

[madaboutharry]

10. Paul Krugman is very good at

calling out politicians on their BS.

[zulchzulu]

12. Did Krugman mean "public" when he wrote "opponents of a private plan"?

I agree with his commentary, but am wondering if he meant "opponents of a public plan" when he wrote "opponents of a private plan"...

Anyway, that is yet another perfect frame for the issue: Opponents of the Public Option are more interested in thinking their government-run healthcare package is great for them and that they are more interested in giving less choices and for protecting monopolies.

[flpoljunkie]

13. Thanks for that. Yes, am sure he must have. Fingers don't always type what you are thinking!

And, brains compensate by reading what the author meant, rather than what he typed. I know I did.

[rockymountaindem]

14. Right, which is why talking about protecting the "free market" is BS

In this debate, as in many others, the so-called "free market" that some are trying to defend is anything but free. In this case, it's a local monopoly in health insurance, which exists in many places. According to one article someone else posted here, 70% of US cities are essentially dominated by one or two providers. Other times the so-called free market involves the US dropping its tariffs while our trading partners maintain theirs or find other ways to ignore our trade agreements such as by suppressing labor rights, etc.

That's why when people say "we need to let the free market decide", one possible response for us would be to say "I agree. Too bad the market you speak of is anything but free". Free markets would be a nice thing to see; too bad for some people (corprocrats) the definition of "free markets" is so elastic it can basically mean anything.

[tranche]

22. It is free. Costs the monopolies nothing to compete.

Besides the cost of campaign contributions of course.

[kenny blankenship]

15. Also, it's EASIER to buy a small state Senator.

Their war-chests aren't funded by as many large, in-state corporate interests, as a large state Senator's is. So, if you're looking to buy yourself a Senator, a small state Senator will appreciate your corporate bribe more than a large state Senator. More bang for your buck.

[flpoljunkie]

16. Blanche Lincoln is the #1 recipient of health industry contributions in 2008 cycle.

http://www.opensecrets.org/industries/recips.php?cycle=2010&ind=H

[avaistheone1]

18. Good find.

That explains volumes.

[Beartracks]

33. Guess that makes her a health care expert! n/t

[Joanne98]

19. Blanche Lincoln = Wall Mart Slave

[Better Believe It]

21. K & R

[immoderate]

24. K&R

--imm

[bleever]

25. Baucus, AKA Max "They bought my office."

Hell, we might end up in the streets, like the Iranians, over health care.

[donheld]

26. The Waltons

That's the reason Senator Lincoln is fighting health care.

[Cha]

27. Blanche Lincoln wouldn't be

being disingenuous, would she?

[GeorgeGist]

28. Sorry, Blanche ...

but your healthcare insurance doesn't cover acute or chronic stupidity.

[Beartracks]

29. What a funny way to define success. That's rich!

Ha ha! Insurance companies "succeed" by refusing to do what they are in business to do!
Imagine if the measure of success for all companies and organizations were like that...


Your pest control company gets you on a 12-month contract, but then says they won't spray your yard because the bugs were already there when you moved in. More money for the pest control company. Success!

Your lawyer, on retainer, determines that he won't defend you in court because it would take too much of his staff's time, considering that you're always doing stupid stuff to get into trouble. Rakes it in, then doesn't provide the service. Success!

Your elected representatives get together every year in D.C. and listen to industry reps and lobbyists instead of constituents. Your taxes pay their salaries, but they don't serve YOU. Success! Oh, wait...... this one actually IS real.

[flpoljunkie]

31. Yet it's the 'government bureaucrats' the Republicans demonize, and MSM lets them get away with it!

[Beartracks]

32. I'd wager insurance bureaucrats cause more harm to citizens than the govt kind. n/t

[PVnRT]

30. K&R

:kick: